China's World Trade Organization accession deal must be fully applied, the head of the trade governing body said on Friday, after the European Commission said it would adopt a new method to assess whether China's exports are priced unfairly low.

China’s World Trade Organization accession deal must be fully applied, the head of the trade governing body said on Friday, after the European Commission said it would adopt a new method to assess whether China’s exports are priced unfairly low.

The European Union has been debating whether to grant China “market economy status” from December, which China says is its right 15 years after joining the WTO. Failure to do so could spark a trade war.

The commission said this week that China was not a market economy and that it would not recognise it as such, but would adopt a new method to set duties that would abide by WTO rules.

China’s Commerce Ministry said it would watch the process closely and further assess the mechanism after the proposal is more clear.

[relate-post]

The terms of China’s WTO accession protocol were not up for negotiation, WTO director-general Roberto Azevedo said at a briefing after a joint meeting with Chinese Premier Li Keqiang and the heads of the International Monetary Fund, the World Bank, and other senior global economic officials.

“The terms of the protocol apply to all WTO members equally. They may see it differently or understand that differently, but the terms of the protocol apply,” Azevedo said, adding that the WTO had no need to make a determination on China’s market economy status.

“Now the way forward, in my view, is to face the issue squarely, collaboratively, through dialogue, trying to find sustainable solutions for this and other sectors where over capacity may exist,” he said.

Because China is currently not treated as a market economy in cases of alleged dumping, EU trade investigators compare Chinese export prices to those of a third country, such as the United States, rather than to domestic prices.

China says this is discriminatory and would breach WTO rules based on the agreement it set when it became a member on Dec. 11, 2001.

The European Union has 59 sets of measures in place to counter dumping or subsidies on products coming from China, ranging from aluminium foil to wire rod. Of 34 ongoing investigations, 22 concern China, the most notable related to different grades of steel.